Sartorial synthesis

Rumors of a consolidation between Vistula and Wólczanka began circulating almost two years ago when Supernova Capital (then CA IB FM) took over 15 percent of Wólczanka shares. But at that time the two companies were at very different stages of development, with Vistula already reaping profits from a large-scale restructuring and Wólczanka struggling to improve its market standing.

"At that time it wouldn't really have been a merger, but the pricing of Wólczanka shares grew significantly and now the two companies, acting separately, make very similar decisions as to their retail activities," explains Maciej Wendzel, CEO of Supernova Capital.

"It's better if such decisions are made by one strong entity instead of two weak ones," he adds.

Now both Vistula, which last year posted a net profit of zł.14 million and Wólczanka, with a zł.2.5 million profit, are planning to strengthen their presence on foreign markets.

Market analysts are in favor of the merger. "Their offers are to a large extent complimentary, they both produce the majority of their apparel in Poland and are going through a period of expansion at the moment. The tie-up would allow the reduction of management costs, for instance by merging accounting and marketing departments. It would also enable the companies to negotiate lower retail space rental prices or other rebates," says Marcin Materna, DM Millennium analyst.